Bank of Ceylon slashes interest rates on pawning loans and overdrafts

BANK INTERESTS: Bank of Ceylon will reduce annual interest rates on cash loans obtained against pawned items by 3 per cent from 18 per cent to 15 per cent from June 1, 2006.

The annual interest rates for overdrafts obtained against pawned items will also be reduced by 2.5 per cent from 18.5 per cent to 16 per cent, with effect from the same date.

Obtaining cash loans or overdraft facilities against the pledge of gold jewellery, gold biscuits or gold coins is used by many people as a speedy and convenient method for obtaining short-term finance.

The amount that can be borrowed from Bank of Ceylon and the repayment period depend on the carat value of the pawned articles. The bank currently pays up to Rs. 11,500 for a gold sovereign. For 24 carat items, the repayment period can go up to six months, while for 22 carat articles it can go up to 12 months.

Individuals obtain cash loans even without having bank accounts, while businesses obtain overdraft facilities on their Bank of Ceylon accounts up to the limit determined by the value the pawned items.